Change the Plan not the Revenue Goal

The New Year or quarter starts, and we have a goal. A few weeks or months into the plan the CFO shows the numbers, and the goal gets scaled back.

Halfway through the plan we scale the goal back again. Clearly the goal was too big!

Is it any surprise that the Revenue Generation process is the weak spot of business today? If manufacturing was asked to build 100,000 units, and they weren’t hitting their number, would leadership scale the 100,000 back or fix what we were doing to achieve the 100,000? Today we are going to fix the problem.

The world of Revenue Science tells us the valid goal comes from the value of what we sell and the size of the market compelled by the value. In over 90% of businesses, the market for who can be compelled is greater that the resources to reach those buyers. So the goal is almost always conservative and probably should be scaled up, not down.

Most of the time the goal is more accurate than a plan to achieve it. Yet we scale the goal back and leave the plan the same. The plan was probably left over from last year (when it didn’t work either) and has never worked, but we will leave that alone, decrease the goal, decrease what it takes to achieve a bonus (for most everyone), and get ready to fire a few, hire a few and roll the same basic plan out next year.

On the surface, this looks very questionable. We have a valid goal, but we change that. We have a plan that in most parts of business would be measured against the goal (both operational and financial metrics), but we keep decreasing the goal (which means all operational / financial metrics get worse because the same costs are compared to smaller and smaller results) and not demanding we fix the plan. Part of the plan challenge is who owns the plan.

The marketing team is sure their brand effort is working; they are creating lots of tradeshow leads and high SEO results, but the problem is sales is not converting.

Sales can’t find a single example of a quality lead from marketing. The marketing material is embarrassing, and the trade shows are pulling the field sales team from their sales funnel.

Delivery is not meeting contracted deadlines for earned revenue since sales is selling the wrong stuff with bad contracts and sloppy Statements of Work that make no sense.

The CEO gave the team valid numbers for the plan, provided budget and let the teams do their thing. If this team doesn’t produce, the CEO will find a team that does produce (that stops when the economy gets better, and everyone claims credit).

Revenue Science tells us to STOP changing the goal. The goal is where valid metrics come from. Compare the impact on the goal from things like tradeshows or no tradeshows. Put a CRO (Chief Revenue Officer) in place who OWNS the revenue strategy for the TOTAL organization and the impact of that revenue budget in achieving that goal. The CRO owns the metrics for both of those and uses the metrics to keep sales, marketing, delivery, customer service, etc. aligned to the revenue strategy.

This TOTAL organization approach and metrics are the foundation for continuous improvement and the changes for next quarter and next year. Everything changes so the company uses the metrics to manage the changes to move faster than the market.

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